The Unexpected

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Handy tools​ to help you plan, manage and budget your finances.

Checklists

Financial planning is important. Be it saving for your retirement or managing your healthcare needs, it can never be too early to start planning. Check to see if your bases are covered and steer yourself in the right direction with the checklists below.

How Much Savings Should I Have at Age 35?

​Worried
that you aren’t saving as much money as your peers? Here’s an
honest look at how much savings you should really have by age 35.

A
common question to ask is how much should you have in savings by a
particular age. Mostly, Singaporeans just ask this because they want
to know if they are “normal”.

But
the answer is not so simple and varies somewhat among
individuals in Singapore.

How
Much Savings Should You Have By 35?

As
an ideal, the correct amount to have saved up – at any age – is
six months of your income. Any amount beyond this should be
redirected into a retirement fund. This is because savings are just
to deal with emergencies, whereas investments are for the long-term.

So
if you have an income of S$5,000 a month, your savings are good if
they are at least S$30,000. Note that your CPF doesn’t count, as
it’s not savings you can immediately access.

Here’s
an alternative way to look at it:

The
typical Singaporean makes around S$3,700 a month (median income).
After CPF, this comes to about S$2,960. Assuming you save 20% of
this (an average savings amount), you would retain S$592 a month.

Let’s
say you have saved this amount since you started working at the
age of 25. You use a standard bank account, with an interest rate of
around 0.125% (you don’t put the savings in a fixed deposit,
as you want to be able to access it immediately in an emergency).

You
would have, after 10 years, around S$71,540.

That’s
not very efficient by the way, as after around S$22,000 (about the
six months income mark), you should be putting the rest of the money
into an investment, such as an endowment plan or mutual fund, to grow
it.

Hold
On! I Don’t Have This Much Money!

Of
course, that’s because projections are ideal situations. The whole
problem with personal finance is that ideals and reality seldom
match.

Everyone’s
financial situation is different. You may have responsibilities that
others don’t. For example, some people have parents or siblings
with medical conditions, who need more expensive healthcare. Some
people have an income lower than the median, which makes it hard to
save. There’s also one element that many people in their 30s have
in common.

Your
30s are typically the age in which you’re saddled with your first
major financial costs. It is probably the first time you buy a flat
or car, and you might be settling down with your first child. It’s
quite possible that you did save diligently from your 20s, but your
wedding has wiped out those funds.

In
fact, a survey conducted
by HSBC in 2013 revealed that 41% of Singaporeans have never even
saved. For many of us, our CPF are our savings, and our flat is the
retirement asset. So if you’re 35 and have much less than S$71,540
in the bank, don’t worry. You’re not some kind of financial
abomination.

Savings
Should Be a Dollar Amount, Not an Age-Specific Goal

It’s
unhealthy to focus on age. Ultimately, your savings goal should be a
dollar amount and not an age.

If
you earn S$5,000 a month and your savings goal is S$30,000, then of
what relevance is your age?

If
you don’t have a single dollar saved and want to start right now,
then save aggressively in the coming year (maybe save 50% instead of
20%). You’ll be done in 12 months. It doesn’t matter if you’re
25, 35, or 45. As soon as you start making an effort, you can resolve
the situation.

Don’t
panic over how much you have right now, and whether that’s “right”
for your age. Focus on how much you need, and how you’re going to
get there. Don’t be under the impression that it’s “too late”
now, or that you missed the boat on being financially responsible.

There
is an upper limit to how much you can budget. After that point, it
comes down to going out and making more money. Don’t be under the
impression that, just because the word “saving” is used, it means
buying less. Building up your savings also means finding ways
to earn more.

And
just like setting aside more money, it’s never too late to start!​

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<p>​​​Whether you plan to continue working or ease into your retirement, 55 is a milestone<em> </em>age in your CPF journey. At 55, you will be given options to manage your savings. Here are 3 things you can do with your CPF.</p>

​​​ABOUT 'ARE YOU READY?'

An initiative of the Central Provident Fund Board, 'Are You Ready?' aims to help you understand the different aspects of your CPF savings as you go through the key stages of your life - from starting work, buying a house to planning for your golden years. It also seeks to give you insights on how you can better manage your finances, grow your nest egg and work towards a secure retirement.